Zoellick fears impact if Greeks reject rescue plan
WASHINGTON – Robert Zoellick, head of the World Bank, on Tuesday called the Greek prime minister's decision to hold a referendum on that country's latest rescue package a "roll of the dice" that will heighten uncertainty in financial markets.
Zoellick told reporters that a rejection of the package by Greek voters would cause a "mess." A no vote would raise doubts about Greece's commitment to accepting painful budget cuts that it needs to qualify for bailout loans from the eurozone and the International Monetary Fund.
"The world economy is still wobbly ... and it could dip very quickly if momentum is not maintained and built upon," Zoellick said.
He said global investors will be watching the outcome of the summit meeting of leaders from the Group of 20 major economies on Thursday and Friday in Cannes, France.
"Market confident will be based on whether governments ... follow through" with their commitments, Zoellick said.
He said it will be primarily up to the Europeans to address the debt crisis by boosting the capital reserves of their banks and increasing the resources of their rescue fund.
"One of the misleading paths would be to assume that someone else will bail you out," Zoellick said. "Europe has to solve its own problems. The United States has to solve its own problems, and Japan has to solve its problems."
Major emerging countries, notably China, might contribute support to the European bailout fund. But Zoellick said Europe "shouldn't be looking for a silver bullet" from the Chinese to solve Europe's debt crisis.
He said it would be politically difficult for China to commit sizable resources to Europe's bailout fund given the disparity in per-capita incomes: Chinese average about $4,000 annually vs. per capita income in Europe of around $38,000.
U.S. Treasury officials say Secretary Timothy Geithner is monitoring the European crisis and will take part in talks Thursday in Cannes involving President Barack Obama, French President Nicolas Sarkozy and German Chancellor Angela Merkel before the G-20 sessions begin.